Written By Kelly R. Ford, James Beeby, Jesslyn Maurier, Stephen Burns, Robyn Enslen, Jai Lakhani and Ryan Moore
As described in our previous blog post, COVID-19 Pandemic-Related Economic Stimulus for Canadian Businesses published on April 9, and our update posts, published on April 16 and April 24, the Canadian federal government and most provincial and territorial governments have introduced programs designed to provide funding or economic relief to Canadian businesses in connection with the COVID-19 pandemic.
Since our most recent publication, there have been several updates to existing programs and a number of new programs have been announced. A summary table with all COVID-19 pandemic-related Canadian business funding announced to date is included at the end of this blog.
Please note that this series of blogs generally does not address tax deferrals or employment subsidies. For more information on these programs and any other COVID-19-related queries, please contact the authors of this blog or visit our COVID-19 Resource Centre.
Updates to Previously Announced Programs
Canada Emergency Commercial Rent Assistance
Prime Minister Justin Trudeau announced on April 24, 2020, that the federal government reached an agreement in principle with all provinces and territories to provide financial assistance to commercial property owners with tenants affected by the COVID-19 pandemic.
This program will be available to eligible small businesses and qualifying commercial property owners. Interested organizations must meet certain criteria to receive this financial relief. The application portal opens May 25, 2020, for eligible property owners.
For further details, please see the Bennett Jones publication, Canada Emergency Commercial Rent Assistance Announced for Qualifying Commercial Property Owners.
Regional Relief and Recovery Fund
As discussed in our April 24 COVID-19 pandemic-related funding blog, the Government of Canada has created the $962-million Regional Relief and Recovery Fund (RRRF) to provide financial assistance to small- and medium-sized enterprises in respect of eligible costs. Funding details have been announced for each of the six regional development agencies and partnered Community Futures organizations.
The funding terms of RRRF loans under $40,000 are the same as the terms for loans under the Canada Emergency Business Account (CEBA), as previously discussed in our April 24 publication. Terms for loans over $40,000 vary by region.
1. Western Canada (British Columbia, Alberta, Saskatchewan and Manitoba)
The RRRF has a total of $304 million available for distribution to COVID-19 pandemic-impacted businesses in Western Canada split between Community Futures Pan West and Western Economic Diversification Canada (WD), with approximately $96 million and $208 million, respectively.
Rural businesses can apply for loans of up to $40,000 through Community Futures Pan West. Potential applicants can apply through their local Community Futures office. The terms of the loan are the same as that required under CEBA.
Western Economic Diversification Canada (WD) has two streams of funding for which businesses may apply (as described below). Only businesses that are ineligible for (or that were declined from) CEBA and the Community Futures program are eligible to apply for RRRF funding through WD.
The first WD stream is for interest-free loans up to $40,000, on the same terms as is required under CEBA.
The second WD stream is for interest-free loans over $40,000 and up to $1 million. Businesses eligible for the second stream must, among other requirements: (i) have fewer than 500 full-time employees; (ii) be incorporated to operate in Canada; (iii) be operational as of March 1, 2020; (iv) have suffered financially due to COVID-19; and (v) have applied for other federal COVID-19 funding support measures. Businesses that have received other federal funding measures may still be eligible for funding under this stream.
Unlike the first stream (loans under $40,000), the full amount of the interest-free loan under the second stream must be repaid. The three-year repayment period begins January 1, 2023, and must be repaid by December 31, 2025.
For both streams, recipients will be required to attest that the full amount of the contribution was expended for eligible expenses and costs and will be required to submit a final report that includes the number of jobs maintained, as well as other metrics as may be requested (such as financial statements).
Applications are open for WD funding on the WD website.
2. Southern Ontario
The RRRF has allocated $252.4 million for distribution to COVID-19-affected businesses in southern Ontario, with $213 million to be distributed through the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) and $39.4 million to be distributed through Ontario's Community Futures Development Corporations (CFDC).
The CFDC will provide up to $40,000 in loans to "main street" businesses in rural communities on the same terms as CEBA. Applicants should contact and follow the application process set out by their local CFDC.
Southern Ontario businesses may apply for RRRF funding through FedDev Ontario in one of two streams. Eligible applicants for both streams must: (i) have fewer than 500 full-time equivalent employees; (ii) be facing funding pressures with fixed operating costs as a result of the COVID-19 pandemic; (iii) have applied to other federal funding measures; (iv) plan to continue or resume operations; and (v) have been a viable business pre-COVID-19. Fixed costs are eligible for funding.
The first FedDev Ontario stream is a conditionally repayable interest-free loan, having the same terms as under the CEBA program, with a funding amount being the lesser of $40,000 or three months of eligible and supported fixed operating costs. Eligible businesses must not qualify for, or must have been declined for, CEBA funding.
FedDev Ontario's second stream is an interest-free loan of up to $500,000. The loan amount will generally be the lesser of three months of eligible and supported fixed operating costs or an amount based on the applicant's 2019 revenues. The entire amount must be repaid, with no payments required until after December 31, 2022. A fixed payment schedule begins January 2023. It is possible for applicants to have received a CEBA loan and still apply for the second stream, but such applicants must first have attempted to access the Business Credit Availability Program and Business Development Bank of Canada Working Capital Program (each of which was previously covered in COVID-19 Pandemic-Related Economic Stimulus for Canadian Businesses).
As with the Western Canada program, recipients will be required to attest that the full amount of the contribution was expended for eligible expenses and costs and will be required to submit a final report that includes the number of jobs maintained, as well as other metrics as may be requested. Unlike the Western Canada program, financial statements must be submitted within 180 calendar days of the recipient's fiscal year.
Each FedDev Ontario stream is currently open for applications. If there is significant demand, priority will be given to significant employers in communities and critical industries, such as manufacturing, technology and tourism. Further details are available on the FedDev Ontario website.
3. Northern Ontario, Québec, Atlantic Canada, and Northern Canada Regions
Under the RRRF, similar programs and streams for funding exist for each of the remaining provinces and territories.
Northern Ontario has been allocated $49.5 million through the RRRF for funding small- and medium-sized businesses. Interested organizations may obtain funding through the Community Futures Development Corporations stream or through the Regional Economic Growth stream. Further details are available at the Federal Economic Development Initiative for Northern Ontario website.
Québec will distribute $211 million in RRRF funding. Organizations may be eligible for funding through a program for loans of $40,000 or less and another program for loans of over $40,000. Greater detail on the initiative, including eligible recipients and authorized costs, is available at the Canadian Economic Development for Québec Regions (CED) website. CED also has further application details available online.
Businesses in Atlantic Canada (New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island) may apply for RRRF funding through the Atlantic Canada Opportunities Agency (ACOA) or through the Atlantic Association of Community Business Development Corporations (CBDC). The RRRF has allocated $110 million in support of COVID-19-affected businesses and communities. Rural organizations should apply through the CBDC, which has $43.2 million to distribute. Businesses ineligible for CBDC funding should apply through the ACOA, which has $66.75 million. Details on both programs, including eligibility and funding amounts, are available at the ACOA website.
Yukon, Nunavut and Northwest Territories organizations may apply for funding through the Canadian Northern Economic Development Agency (CanNor), to which the RRRF this year has added $34.3 million in funding. Interested businesses should contact their local CanNor office to apply. Certain of this funding will also expand the eligibility for the Northern Business Relief Fund to a maximum of 100 employees from the previous 50 employees (as discussed in Additional Updates to COVID-19 Pandemic-Related Economic Stimulus for Canadian Businesses).
New Funding: Federal
Large Employer Emergency Financing Facility
The Large Employer Emergency Financing Facility (LEEFF) will be available to large for-profit businesses, with the exception of those in the financial sector, seeking financing of $60 million or more. Eligible businesses will generally have revenues of $300 million or more, must have significant operations or workforce in Canada and not be involved in any active insolvency proceedings.
The loan will be 80 percent unsecured, having a term of five years, and 20 percent secured, with a maturity matching the borrower's other secured debt. Interest on the loan will accrue at a rate of 5% per annum for the first year, 8 percent per annum for the second year and will increase by 2 percent for each year after. The borrower may repay the loan early without penalty. Interest may be satisfied through in-kind contributions for the first two years of the loan.
The borrower will be subject to certain restrictions on capital distributions, share repurchases, dividends and executive compensation for the duration of the loan. The borrower must also, for the duration of the term of the loan: (i) perform existing pension obligations; (ii) perform material obligations under collective bargaining agreements; and (iii) publish an annual climate-related financial disclosure report.
Unlike other funding options discussed in this blog series, the borrower must issue to the Government of Canada warrants to purchase the borrower's (or the borrower's parent company's) common shares in an amount equal to 15 percent of the principal amount of the loan, or advance cash consideration equivalent to the value of the warrants, as compensation for advancing the loan.
Loans will be assessed on a case-by-case basis according to applicant need. Applicants should express their interest by contacting LEEFF-CUGE@cdev.gc.ca.
New Funding: Manitoba
Manitoba Gap Protection Program
The Manitoba Gap Protection Program (MGPP) will provide up to $120 million in funding towards small- and medium-sized business that have not received a non-repayable financial contribution of more than $6,000 from a federal financial program directed to relieve the economic effects of COVID-19.
The province will advance each business eligible for MGPP a non-interest bearing loan of $6,000. The loan will be forgiven on December 31, 2020, if the recipient has not received any other non-repayable COVID-19 federal support of more than $6,000; otherwise the MGPP loan will be due and owing on March 31, 2021.
Eligible companies must: (i) be a permanent, Manitoba-based business operating in the province; (ii) have been operational on March 20, 2020; (iii) have temporarily ceased or curtailed operations as a result of a COVID-19 public health order and have been harmed by the health order; (iv) be registered and in good standing with the province's Business and Corporate Registry, if applicable; (v) have not qualified for other federal government COVID-19 grants, nor intend to apply for such funding support; and (vi) have an email address and a bank account.
Businesses may apply by filling out the online application form available at the MGPP website. The application deadline is July 31, 2020, but is subject to change as determined by the Manitoba Government.
Upcoming Federal Funding
COVID-19 Economic Response Plan: Support Programs for Indigenous Businesses
On April 18, 2020, the federal government unveiled a $306.8-million support program for Indigenous business administered through the National Aboriginal Capital Corporations Association (NACCA) and Métis capital corporations in partnership with Indigenous Service Canada. Eligible businesses will receive up to $40,000 in funding, comprising a $30,000 interest-free loan and $10,000 non-repayable contribution.
The NACCA will work with various Aboriginal Financial Institutions to provide funds to eligible small- and medium-sized businesses. The funding is intended for businesses to address immediate liquidity needs from the COVID-19 pandemic.
Eligibility requirements and application details are not yet fully determined. If interested, businesses can register for updates at the NACCA website.
Canadian Seafood Stabilization Fund
On April 25, 2020, the Department of Fisheries and Oceans Canada announced the Canadian Seafood Stabilization Fund. This $62.5-million fund will support the fish and seafood processing sector by mitigating the loss of markets for fresh products resulting from COVID-19. Businesses should use the funds to: (i) increase refrigeration capacity and improve freezer technologies; (ii) implement health and safety measures for workers; (iii) implement advanced manufacturing technologies; and (iv) secure new markets and support transportation costs to reach those markets.
The funds will be delivered through three Regional Development Offices:
- in Atlantic Canada, through the Atlantic Canada Opportunities Agency;
- in Québec, through Canada Economic Development for Québec Regions; and
- in the Western Canadian provinces, through Western Economic Diversification Canada.
Interested businesses should reach out to their specific Regional Development Office to discuss specific needs. More information on funding and applications is anticipated in the coming weeks.
BDC—Additional Support to Oil and Gas Sector Companies
The Business Development Bank of Canada will make available commercial loans, ranging in size from $15 million to $60 million, to exploration and production, mid-stream and oilfield companies affected by COVID-19. The funds are intended to be used for operational cash flow needs over the next 12 months.
Eligible companies must have been financially viable before the COVID-19 impacts on the economy.
Details on this program are being finalized and will be updated once they become available.
We will continue to provide updates as further programs are made available and additional details are released. If your business or organization has questions in respect of COVID-19 funding-related matters, please contact the authors of this blog. In addition, please visit our COVID-19 Resource Centre for other COVID-19 related resources.
|Jurisdiction||Program||Funding Maximum||Funding Type||Size of Business (if applicable)||Other Requirements*|
|Federal||BDC Additional Support to Oil and Gas Sector Companies||Case-by-case||Details Pending||Details Pending||Part of oil and gas industry|
|Federal||BDC Capital Bridge Financing Program||Case-by-case||Convertible Note||n/a|
|Federal||BDC New Co-Lending Program for Small and Medium Enterprises||$6,250,000||Loan||Small/ Medium|
|Federal||Boosted Support from Farm Credit Canada||$500,000||Line of Credit||n/a||Part of agri-business industry|
|Federal||Canada Emergency Business Account||$40,000||Loan||Small|
|Federal||Canada Emergency Commercial Rent Assistance||$75,000||Loan/Forgivable Loan||n/a||Commercial landlord|
|Federal||COVID-19 Development Stimulus Fund||$25,000||Grant||n/a||51% Indigenous ownership and part of tourism industry|
|Federal||Digital Technology Supercluster COVID-19 Program||$5,000,000||Grant||n/a||Member of Supercluster|
|Federal||Export Development Canada New Loan Guarantee for Small and Medium Enterprises||$6,250,000||Loan/loan guarantee||Small/Medium||Part of exports industry|
|Federal||Large Employer Emergency Financing Facility||$60,000,000 and more||Loan||Large|
|Federal||National Research Council of Canada's Industrial Research Assistance Program||Case-by-case||Grant||Small/Medium|
|Federal||Next Generation Manufacturing Canada Supercluster||$5,000,000||Grant||n/a||Member of Supercluster|
|Federal||Northern Business Relief Fund||$100,000||Grant||Small/Medium||Based in Yukon, NWT or Nunavut|
|Federal||NRC Canada Innovation Assistance Program||Case-by-case||Grant||Small/Medium|
|Federal||Regional Development Agencies Funding||Case-by-case||Loan||Small/Medium||Part of tourism industry|
|Federal||Regional Relief and Recovery Fund||Case-by-Case||Loan/Forgivable Loan||Small/Medium|
|Federal||Seafood Stabilization Fund||Details Pending||Details Pending||Details Pending||Based in Western provinces, Québec, or Atlantic Canada|
|Federal||Support Programs for Indigenous Businesses||$40,000||Loan/Forgivable Loan||Small/Medium|
|British Columbia||Emergency Relief Funds Program||$5,000||Grant||n/a||51% Indigenous ownership and part of tourism industry|
|British Columbia||Small Business Working Capital Loans||$25,000||Loan||Small||Based in Columbia Basin Trust region|
|Saskatchewan||Small Business Emergency Payment Program||$5,000||Grant||Small/ Medium|
|Manitoba||Gap Protection Program||$6,000||Loan/Grant||Small/ Medium|
|Ontario||Ontario Together Fund||Case-by-case||Grant||n/a|
|Québec||Exceptional Support Measures for Small Businesses||$300,000||Loan||Small/Medium||Based in the Papineau-Collines region|
|Québec||Concerted Temporary Action Program for Businesses||$50,000||Loan/loan guarantee||n/a|
|Québec||Emergency Aid for Small- and Medium-Sized Business||$50,000||Loan||Small/Medium|
|New Brunswick||COVID-19 Working Capital Loans||$1,000,000||Loan||n/a|
|New Brunswick||Small Business Emergency Working Capital Program||$100,000||Loan||Small/Medium|
|Prince Edward Island||Emergency Working Capital Financing||$100,000||Loan||Small|
|Nova Scotia||Small Business Impact Grant||$5,000||Grant||Small|
|Yukon||Business Relief Program||$60,000||Grant||n/a|
|Northwest Territories||Business Development and Investment Corporation - Working Capital Loans||$25,000||Loan||Small/Medium|
|Nunavut||Small Business Support Program||$5,000||Grant||Small|
*Unless otherwise indicated, provincial and territorial programs are only available to businesses located in and operating in the applicable province or territory.